Scott Blasdell, Managing Director at J.P. Morgan Asset Management, says that while Citigroup Inc (C) is a controversial name, he sees opportunity for the company to earn a lot more.
Citigroup, it’s probably been the most controversial bank since the financial crisis. First, it had to be rescued by the U.S. government, then it had trouble with the Fed’s CCAR exam, and there were various management changes.
As is typical with a controversial name, the stock looks quite cheap to us. We think the company can earn a lot more, particularly if they are allowed to return capital to shareholders. We think the company can earn $6.90 in a more normal environment, which is one of the cheapest multiples of normal earnings of any bank; the stock is currently in the low $50s.
We like current management. We think they’ve cleaned house and are moving in a positive direction.
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